We use cookies on our website. If you continue to browse our website without taking any action, we will assume that you are happy to receive all cookies from our website.Read MoreDismiss

Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

FEAnalytics.com

FEInvest.net

FETransmission.com

Investegate.co.uk

Trustnet.hk

Trustnetoffshore.com

Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

to present content effectively;

to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;

to carry out our obligations arising from any contracts between you and us;

to enable you to participate in interactive features of our service, when you choose to do so;

to notify you about changes to our service;

to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

We have audited the accompanying consolidated financial statements of Vestel Elektronik Sanayi ve Ticaret A.S. and its subsidiaries listed under note 1 (the 'Group'), which comprise the consolidated balance sheet as at 31 December 2008, and the consolidated statements of income, changes in equity and cash flow for the year then ended and a summary of significant accounting policies and other explanatory notes.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Conclusion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2008, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

The accompanying notes are an integral part of these consolidated financial statements.

1. ORGANISATION AND NATURE OF ACTIVITIES

Vestel Elektronik Sanayi ve Ticaret Anonim Sirketi (the “Company” or “Vestel Elektronik”) was founded in March 1983 under the name of Ferguson Elektronik Sanayi ve Ticaret A.Ş.under the Turkish Commercial Code and was registered in İstanbul, Turkey. The name was changed to Star Elektronik Sanayi ve TicaretA.Ş. during the same year. In April 1984 Polly Peck Group acquired the Company and changed its name to Vestel Elektronik Sanayi ve Ticaret Anonim Sirketi which has been its current name. In 1990 18% of the Company’s shares were issued to the public at the Istanbul Stock Exchange. The Company has been operating under the Foreign Capital regulations in Turkey since July 1985. In 1991 Polly Peck Group transferred all of its shares to one of its subsidiaries named Collar Holding BV based in the Netherlands and in the same year, following the collapse of the Polly Peck Group, the Company was placed in administration. In November 1994 Ahmet Nazif Zorlu acquired the Company from the administrator of the Polly Peck Group by buying the entire share capital of Collar Holding BV which at the time held 82% of the Company’s issued share capital.

The registered office address of the Company is located at Ambarli, Petrol Ofisi Dolum Tesisleri Yolu, Zorlu Plaza, Avcilar / Istanbul- Turkey

For the purpose of the consolidated financial statements, the Company and its consolidated subsidiaries are referred to as the “Group”.

Nature of Activities of the Group

The Group is organized into three product divisions given below;

A. Television production:

Vestel Elektronik Sanayi ve Ticaret A.Ş.

The Company is mainly engaged in the production of colour televisions. The Company’s production facilities are located in Manisa industrial site (Aegean Region, Turkey). As of the balance sheet date, production capacity for colour televisions was 14.000.000 (2007: 19.000.000) units per year respectively.

B. Refrigerator, air conditioning units, washing machines and cookers

Vestel Beyaz Esya Sanayi ve Ticaret A.Ş.. (“Vestel White”)

Vestel White started working actively in 1999 and has been engaged in the production of refrigerators, room air conditioning units, washing machines and cookers. Vestel White’s production facilities are located in Manisa industrial site (Aegean Region, Turkey). As of the balance sheet date, production capacity for refrigerators, room air conditioning units, washing machines, cooker and dishwasher unit was 3.700.000, 600.000, 2.700.000, 1.250.000 and 500.000 (2007: 3.000.000, 700.000, 2.000.000, 1.500.000 and 500.000) units per year respectively.

Vestel CIS

During 2005, Vestel CIS commenced construction of white goods production facilities and started production by end of 2005.

C. Digital Devices

Vestel Komünikasyon Sanayi ve Ticaret A.Ş.. (“Vestel Kom”)

Vestel Kom is engaged in the production of electronic devices. Vestel Kom’s production facilities are primarily located in İzmir Aegean free zone industrial site.

Vestel Dijital Üretim Sanayi A.Ş.. (“Vestel Dijital”)

Vestel Dijital is engaged in the production of electronic devices. Vestel Dijital’s production facilities are located in Manisa industrial site. As of the balance sheet date, production capacity for digital devices, computer and panel was 11.260.000 (2007: 5.260.140) units per year.

Vestel Elektronik has always exercised effective control over the management of each of the companies included in the group consolidation.

2008

2007

Consolidated company

Location

Ownership interest

Economic interest

Ownership interest

Economic interest

Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş.

Turkey

72,6

72,6

72,6

72,6

Vestel Komünikasyon Sanayi ve Ticaret A.Ş.

Turkey

99,4

99,3

99,4

99,3

Vestel Dış Ticaret A.Ş.

Turkey

99,7

99,7

99,7

99,7

Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş.

Turkey

100,0

100,0

100,0

100,0

Vestel CIS Ltd.

Russia

100,0

100,0

100,0

100,0

Deksar Multimedya ve Telekomünikasyon A.Ş.

Turkey

99,9

99,9

99,9

99,9

Vestel Savunma Sanayi A.Ş.

Turkey

30,0

29,9

30,0

29,9

Aydın Yazılım Elektronik ve Sanayi A.Ş.

Turkey

60,0

18,0

60,0

18,0

Vestel Iberia SL

Spain

100,0

99,7

100,0

99,7

Vestel France SA

France

99,9

99,5

99,9

99,5

Vestel Italy SRL

Italy

100,0

99,7

51,0

50,8

Vestel Holland BV

Holland

100,0

99,7

100,0

99,7

Veseg Video Handelsgesellschaft GmbH

Germany

100,0

99,7

100,0

99,7

Cabot Communications Ltd.

UK

90,8

90,9

90,8

90,9

Vestel Benelux BV

Holland

51,0

50,8

51,0

50,8

Vestel UK Ltd.

UK

100,0

99,7

100,0

99,7

Cabot İzmir Donanım Sanayi ve Ticaret A.Ş.

Turkey

58,0

52,7

58,0

52,7

Vestel Dijital Üretim Sanayi A.Ş.

Turkey

99,8

99,3

99,8

99,3

Electronics Outlet SRL

Italy

100,0

99,7

100,0

50,8

Vestek Elektronik Araştırma Geliştirme A.Ş.

Turkey

94,0

94,0

94,0

94,0

Vestel Trade Ltd.

Russia

100,0

100,0

100,0

100,0

Birim Bilgi Teknolojileri Ticaret A.Ş.

Turkey

45,0

45,0

45,0

45,0

OY Vestel Scandinavia AB

Finland

100,0

99,7

100,0

99,7

Deksarnet Telekominikasyon A.Ş.

Turkey

99,9

99,9

99,9

99,9

Intertechnika LLC

Russia

99,9

99,9

99,9

99,9

Vestel Savunma Sanayi A.Ş., Aydin Yazılım Elektronik Sanayi ve Ticaret A.Ş. and Birim Bilgi İşlem ve Müşavirlik Ticaret A.Ş. with group shares of respectively 29,9%, 18% and 45% are consolidated because they are under the effective control and management of the Group.

The consolidated financial statements for the year ended 31 December 2008 (including comparatives) were approved by the board of directors on 10.04.2009.

2. BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as developed and published by the International Accounting Standards Board (“IASB”).

The Company, which is quoted atthe İstanbul Stock Exchange, maintains its books of account and prepares its statutory financial statements in accordance with the Turkish Commercial Code, accounting policies prescribed by the Turkish Capital Markets Board and tax legislation and since 1994 has adopted the Uniform Chart of Accounts issued by the Ministry of Finance (collectively “Turkish Practices”). Its subsidiaries which are incorporated in Turkey maintain their books of account and prepare their statutory financial statements in accordance with the Turkish Commercial Code and Tax Legislation and the Uniform Chart of Accounts issued by the Ministry of Finance. The foreign subsidiaries maintain their books of account and prepare their statutory financial statements in their local currencies and in accordance with the regulations of the countries in which they operate. The financial statements of overseas subsidiaries are converted into Turkish Lira (TL) by closing rate method. The consolidated financial statements have been prepared from statutory financial statements of the Company and its subsidiaries and presented in Turkish Lira (TL) with adjustments and reclassifications for the purpose of fair presentation in accordance with IFRS. Such adjustments mainly comprise deferred taxation, employee termination benefits, fixed assets and borrowing costs, receivables, interest expense accruals on bank loans.

2.1 Measurement currency and reporting currency

The financial statements have been prepared under the historical cost convention, other than financial assets which are stated at fair value.

The restatement for the changes in the general purchasing power of TL as of 31 December 2005 is based on IAS 29 (“Financial Reporting in Hyperinflationary Economies”). IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date and the corresponding figures for previous periods be restated in the same terms. One characteristic (but not limited to) that necessitates the application of IAS 29 is a cumulative three year inflation rate approaching or exceeding 100%. As of 31 December 2005, the three year cumulative rate was 36% (31 December 2004: 70% - 31 December 2003: 181%) based on the Turkish countrywide wholesale price index published by the State Institute of Statistics.

As from 1 January 2006 it has been decided to discontinue the adjustment of financial statements for inflation after taking into account that hyperinflation period has come to an end as indicated by existing objective criteria and that other signs indicating the continuance of hyperinflation have largely disappeared.

The effects of ending the adjustments for inflation on financial statements are summarized as follows:

The financial statements as of 31 December 2006, 2007 and 2008 have not been subjected to any inflation adjustment whereas the financial statements for previous periods have been adjusted for inflation on basis of the measuring unit current at the preceding balance sheet date namely 31 December 2005.

Together with the ending of the hyperinflationary period the balances adjusted for inflation as of the last preceding balance sheet date form the opening balances of the assets, liabilities and equity accounts as of 1 January 2006.

According to the law numbered 5083 related to the currency of Republic of Turkey and the decision of the Council of Ministers dated 04.04.2007 numbered 2007/11963 the expression of “new” has been cancelled on New Turkish Lira and New Kurush effective from 01.01.2009. After this conversion 1 New Turkish Lira is held equal to 1 Turkish Lira and 1 New Kurush is held equal to 1 Kurush. All laws, legislations, administrative and legal transactions, court decisions, commercial papers and all kind of documents referencing New Turkish Lira will be considered in Turkish Lira with the conversion rate mentioned above. Beginning from 01.01.2009, in the presentation of financial statements New Turkish Lira has been replaced by Turkish Lira. In the attached financial statements, this conversion has been made retrospectively for convenience purposes.

2.2Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company.

Management of the Company anticipates that all of the pronouncements detailed in (a) and (b) above will be adopted in the Company's accounting policy for the first period beginning after the effective date of the pronouncement. Management of the Company has decided that these new standards and interpretations have been issued but are not expected to have a material impact on the Company's financial statements.

The balance sheets with the accompanying notes as of 31.12.2008 and 31.12.2007 and statement of income, cash flow and changes in equity with the accompanying notes for the year ended 31.12.2008 and 31.12.2007 are presented as comparatively.

For the compatibility of the current financial statements these financial statements are reclassified if necessary.

2.4 Critical accounting estimates, assumptions and judgments

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are reviewed periodically and as adjustments become necessary they are reported in earnings in the periods in which they become known.

The key assumption concerning the future and other key sources of estimation uncertainty at the balance sheet date and the significant judgments with the most significant effect on amounts recognized in the financial statements are set out below:

- Allowance for doubtful debts reflect the amount set aside for the losses in the future related to receivables which exist the balance sheet date but which, in the opinion of the management carry the risk of collection due to current economic conditions. When evaluating whether receivables has suffered a loss in value the past performance of the debtors, their credibility in the market and their performance between the balance sheet date and report date together with changed circumstances are taken in the considerations. In addition the collaterals existing as balance sheet date together with new collaterals obtained between the balance date and report date are also taken into consideration. The allowance for doubtful receivables as of the balance sheet dates are explained under note 7.

- When setting aside the provision for legal claims the probability of loosing the related case and the results to expect to be suffered in the event that the legal counsel of the Group and management of the Group make their best estimates to calculate the provision required under note 21.

- As for the diminution in value of stocks, all stocks are subjected to review and their usage possibility ascertained on basis of the opinion of the technical personnel; provisions are set aside for items expected not to have usage possibility. Calculation of net realizable values of stocks is based on selling prices as disclosed by selling price lists after deduction for average discounts given during the year and selling expenses to be incurred for the realization of stocks. If the net realizable value of any stock falls under its cost price appropriate provisions are therefore set aside.

- In accordance with the accounting policy outlined under note 3 goodwill is reviewed every year for impairment; if circumstances call for it this review for impairment is made at more frequent intervals. The recoverable value of cash generating units is ascertained on basis of their value in use. Calculations have been made in this respect and these revealed an impairment in value of TL 3.470 (2007 – nil).

- Property, plant and equipment and intangible assets held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The Group estimates that the useful lives of tangible and intangible assets. Depreciation is charged using the straight line basis over the useful lives which depend on the best estimation of the management. Useful lives of property, plant and equipment and intangible assets are reviewed at each balance sheet dates and make changes if necessary.

- Deferred tax assets are accounted for only where it is likely that related temporary differences and accumulated losses will be recovered through expected future profits. When accounting for deferred tax losses it is necessary to make important estimations and evaluations with regard to taxable profits in the future periods. As mentioned under note 17 the related companies of the Group included in the consolidated statements have taxable losses of TL 139.720 (2007 – 36.155) carried forward to future periods and deferred tax assets have been calculated on basis of the expectation that taxable profits will be created in future periods.

2.5 Offsetting

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies followed in the preparation of the accompanying financial statements are summarized below:

Group accounting

Subsidiary undertakings

The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company. Control is achieved where the company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities.

On acquisition, assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. The interest of minority shareholders is stated at the minority’s proportion of their fair values of the assets and liabilities recognized.

The balance sheet and income statement of the subsidiaries are consolidated on a line by line basis, and the carrying value of the investment held by the Company is eliminated against related equity and reserves accounts.

All significant inter-company transactions and balances between group enterprises are eliminated on consolidation.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.

Foreign currency translations

Foreign currency transactions and translation -Transactions in foreign currencies during the period have been translated into TL at the exchange rates prevailing at dates of these transactions. Balance sheet items denominated in foreign currencies have been translated at the exchange rates prevailing at the balance sheet dates. Exchange gains or losses arising from settlement and translation of foreign currency items have been included in the income or expense accounts as appropriate.

The foreign exchange rates used by the Company are as follows:

2008

2007

US Dollar

1,5123

1,1647

EURO

2,1408

1,7102

Foreign entities -Foreign consolidated subsidiaries are regarded as foreign entities since they are financially, economically and organizationally autonomous. Their reporting currencies are the respective local currencies. Financial statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect to the balance sheet and at exchange rates at the dates of the transactions with respect to the income statement. All resulting translation differences between the closing balances and opening balances due to the difference in inflation and devaluation are included in currency translation adjustment in equity.

Property, plant and equipment

Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, restated in equivalent purchasing power at 31 December 2005 less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Property, plant and equipment in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost, less any identified impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Company’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under construction, over their estimated useful lives, using the straight line basis over the following years stated below:

Years

Land improvements

10 to 20

Buildings

25 to 50

Machinery, equipment and moulds

10 to 15

Furniture and fixtures

5 to 12

Motor vehicles

5 to 10

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in income.

Leases

Finance lease -Assets held under finance leases are recognized as assets of the Company at their fair value at the date of acquisition. The corresponding liability to the Company is included in the balance sheet as a finance lease obligation. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of interest on the remaining balance of the liability for each accounting period.

Operating lease -Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments on operating lease are recognized as an expense on a straight-line basis over the lease term.

Intangible assets

Goodwill –Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of Vestel DayanıklıTüketim Malları ve PazarlamaA.Ş., Vestel DışTicaretA.Ş., Vestel Komünikasyon Sanayi ve TicaretA.Ş.andVestel Beyaz Eşya Sanayi veTicaretA.Ş.at the date of acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

On disposal of a subsidiary the attributable amount of unamortized goodwill is included in the determination of the profit or loss on disposal.

Research and development costs –Research expenditure is recognized as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognized as intangible assets to the extent that the expenditure is expected to generate future economic benefits. Development costs that have been capitalized are amortized on straight line basis over 3 - 5 years which is the estimated period over which technology is expected to lead the market and have commercial value. The carrying values of capitalized research and development expenditure are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Other intangible assets –These are amortized using the straight line basis over their useful lives which vary between 5 to 10 years.

Impairment of intangible assets –Where an indication of impairment exists, the carrying amount of any intangible asset including goodwill is assessed and written down immediately to its recoverable amount.

Financial assets

Financial assets other than hedging instruments are divided into the following categories:

• available-for-sale financial assets

• held-to-maturity investments.

Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument's category is relevant for the way it is measured and whether any resulting income and expenses is recognised in profit or loss or directly in equity.

Generally, the Group recognises all financial assets using settlement day accounting. An assessment of whether a financial asset is impaired is made at least at each reporting date. All income and expense relating to financial assets are recognised in the income statement line item 'finance costs' or 'finance income', respectively.

Available-for-sale financial assets are non-derivative financial assets that do not qualify for inclusion in any of the other categories of financial assets. The Group’s available-for-sale financial assets include unconsolidated investments and a listed security.

The fair value of listed security, Zorlu Enerji Elektrik Üretim A.Ş., is based on current bid prices at the balance sheet date. Unconsolidated investments which are not quoted at any stock exchange are reported at cost less any impairment charges, as its fair value can currently not be reliably estimated.

Gains and losses arising from financial instruments classified as available-for-sale are only recognised in profit or loss when they are sold or when the investment is impaired. In the case of impairment, any loss previously recognised in equity is transferred to the income statement. Losses recognised in the income statement on equity instruments are not reversed through the income statement but charged to equity. Losses recognised in prior period consolidated income statements resulting from the impairment of debt securities are reversed through the income statement, if the subsequent increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss.

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity. Investments are classified as held-to-maturity if it is the intention of the Group's management to hold them until maturity. The Group currently holds time deposits that fall into this category.

Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. In addition, if there is objective evidence that the investment has been impaired, the financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment are recognized in profit or loss.

Inventories

Inventories are stated at the lower of cost and net realizable value. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition but excludes borrowing cost. Cost is calculated by using the weighted averagemethod. Net realizable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

Trade receivables

Trade receivables are measured at initial recognition at fair value and are subsequently measured at amortized cost using the effective interest rate method to set an allowance for unearned interest. Appropriate allowances for estimated irrecoverable amounts are recognized in profit or loss when there is objective evidence that the asset is impaired. The allowance recognized is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Trade payables

Trade payables are initially measured at fair value and are subsequently measured at amortized cost using the effective interest rate method to set an allowance for unearned interest.

Related parties

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making the financial and operating decisions. For the purpose of these financial statements shareholders are referred to as related parties. Related parties also include individuals that are principle owners, management and members of the Company's Board of Directors and their families. In the course of conducting its business, the Company conducted various business transaction with related parties on commercial terms (see note 26).

Bank borrowings

Interest-bearing bank loans and overdrafts are recognized at fair value at initial recognition which equate to the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accruals basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Recognition and derecognition of financial instruments

The Company recognizes a financial asset or financial liability in its balance sheet when and only when it becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset or a portion of a financial asset when and only when it loses control of the contractual rights that comprise the financial asset or a portion of a financial asset or when a financial asset or a portion of a financial asset expires. The Company derecognizes a financial liability when and only when a liability is extinguished and that is when the obligation specified in the contract is discharged, cancelled and expires.

Commitments and contingencies

Transactions that may give rise to contingencies and commitments are those where the outcome and the performance of which will be ultimately confirmed only on the occurrence or non occurrence of certain future events, unless the expected performance is not very likely. Accordingly, contingent losses are recognized in the financial statements if a reasonable estimate of the amount of the resulting loss can be made. Contingent gains are reflected only if it is virtually certain that the gain will be realized.

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group manufactures and sells a range of television sets and monitors, electronic devices and white goods in the wholesale market. Sales of goods are recognized when a group entity has delivered products to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery does not occur until the products have been shipped to the specified location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provision have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

Other revenues earned by the Company are recognized on the following bases:

Rental income – on an accrual basis.

Interest income – on an effective yield basis.

Income taxes

Tax expense (income) is the aggregate amount included in the determination of net profit or loss for the period in respect of current and deferred tax.

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the cost of those assets. All other borrowing costs are recognized in net profit or loss in the period in which they are incurred.

Employee termination benefits

Under Turkish labour law, the Company and its Turkish subsidiaries are required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, or who retires in accordance with social insurance regulations or is called up for military service or dies. The reserve for retirement pay is made for the maximum amount payable to employees, based on their accumulated period of service at the balance sheet date.

Provisions

Warranty provision–The Company recognizes the estimated liability to repair or replace products still under warranty at the balance sheet date. The provision is calculated based on past history of level of repairs and replacements.

Other provisions- Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

Earnings per share

Earnings per share (“EPS”) disclosed in the income statements are determined by dividing net income by the weighted average number of shares that have been outstanding during the related year or period and taking into account bonus issues and right issues. There is no difference between basic and diluted earnings per share for any class of shares for any of the years.

Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand; deposits with banks and other financial institutions with the original maturity of three months or less.

4. EARNINGS PER SHARE

2008

2007

Net profit attributable to shareholders

(402.712)

30.866

Weighted average number of ordinary shares in issue('000)

17.545.628

17.545.628

Basic and diluted earnings per share - TL

(0,02)

0,00

5. SEGMENT INFORMATION

The Group is currently organized into three major production divisions. The basis on which the Group reports its primary segment information is as follows:

The segment assets and liabilities as of the balance sheet dates and capital expenditure for the year then ended are as follows:

Television and electronic devices

White
goods

Other

Total

2008

Trade receivables

910.342

203.857

35.216

1.149.415

Inventories

435.464

345.881

5.168

786.513

Property, plant and equipment

495.053

512.189

9.755

1.016.997

Intangible assets

153.499

179.823

16.550

349.872

Unallocated assets

628.956

Total assets

3.931.753

Trade payables

1.498.926

363.554

134.058

1.996.538

Unallocated liabilities

1.015.732

Total liabilities

3.012.270

Capital expenditure

104.861

55.622

40.724

201.207

2007

Trade receivables

898.000

217.678

25.760

1.141.438

Inventories

802.124

283.125

6.130

1.091.379

Property, plant and equipment

532.778

484.850

5.651

1.023.279

Intangible assets

153.270

146.326

2.248

301.844

Unallocated assets

779.024

Total assets

4.336.964

Trade payables

1.734.861

291.455

36.519

2.062.835

Unallocated liabilities

929.775

Total liabilities

2.992.610

Capital expenditure

108.277

80.622

24.500

213.399

Segment assets and liabilities are reconciled to entity assets and liabilities as follows:

2008

2007

Assets

Liabilities

Assets

Liabilities

Cash and cash equivalents

343.148

--

512.130

--

Deferred tax

65.818

62.409

42.304

56.841

Other assets

219.196

--

222.877

--

Financial assets available-for-sale

794

--

1.713

--

Current tax

--

587

--

11.642

Current borrowings

--

306.894

--

236.948

Non-current borrowings

--

406.900

--

425.417

Employee termination benefits

--

17.883

--

19.208

Provisions

--

112.370

--

70.174

Other liabilities

--

108.689

--

109.545

628.956

1.015.732

779.024

929.775

Geographical segments:

Segment assets

2008

2007

Turkey

2.601.381

2.897.173

Europe

981.371

1.176.231

Russia

349.001

263.560

3.931.753

4.336.964

Revenue

Turkey

1.154.485

1.213.326

Europe

3.153.745

3.172.222

Rest of the world

385.711

241.463

4.693.941

4.627.011

Capital expenditure on property plant and equipment

Turkey

110.267

132.212

Europe

692

841

Asia

9.345

29.071

120.304

162.124

Capital expenditure on intangible assets

Turkey

79.138

48.149

Europe

1.765

2.310

Asia

--

816

80.903

51.275

Depreciation expenses of property plant and equipment

Turkey

147.634

143.053

Europe

902

901

Asia

9.491

3.362

158.027

147.316

Depreciation expenses of intangible assets

Turkey

28.618

14.465

Europe

1.426

643

Asia

--

--

30.044

15.108

6. CASH AND CASH EQUIVALENTS

2008

2007

Cash at bank and in hand

158.403

175.972

Time deposits

181.843

320.385

Other

2.902

15.773

Cash and cash equivalents

343.148

512.130

Bank overdrafts (-)

(197)

--

Cash and cash equivalents presented in cash flow statement

342.951

512.130

Time deposit accounts mature in January 2009 (2007: January 2008).

7. TRADE RECEIVABLES

Current

Current accounts

- Third parties

849.838

858.055

- Related parties, note 26

13.931

15.799

Notes receivable

- Third parties

333.937

296.505

Others

274

4.364

1.197.980

1.174.723

Unearned interest on receivables (-)

(20.738)

(19.058)

Allowance for doubtful receivables (-)

(29.176)

(20.668)

1.148.066

1.134.997

Movement of doubtful receivables is given below:

Beginning balance

20.668

13.739

Charge for the period

9.653

8.251

Amounts utilized during the year

(1.548)

(1.322)

Translation differences

403

--

Ending balance

29.176

20.668

8. INVENTORIES

2008

2007

Raw materials

391.062

585.278

Work in process

35.363

45.793

Finished goods and merchandise

385.758

468.968

Other

13.264

11.634

825.447

1.111.673

Provision for diminution in value (-)

Raw materials

(18.007)

(10.439)

Finished goods and merchandise

(20.927)

(9.855)

786.513

1.091.379

Movement of allowance for diminution in value of inventories is as follows:

Beginning balance

20.294

8.555

Charge for the period

19.220

13.201

Disposal of impaired stocks during the period

(919)

(1.462)

Translation differences

339

--

Ending balance

38.934

20.294

The cost of inventories recognized as expense and included in cost of sales during the year amounted to TL 2.897.741 (2007: TL 3.333.667).

9. OTHER ASSETS

Current

Prepaid expenses

16.965

23.518

VAT receivable

80.949

115.289

Work advances

1.156

2.636

Due from related parties, note 26

3.058

2.079

Project expenses

48.133

44.554

Receivables from insurance company (*)

--

2.912

Fair value of forward contracts

9.965

--

Prepaid taxes

8.177

2.444

Other

27.003

9.999

195.406

203.431

(*) The property, plant and equipment related to TV division and a part of white good production division, a part of stocks of finished goods, components and raw materials of Vestel CIS Ltd. (Russia), a 100% subsidiary of the Company were destroyed as a result of fire on 14 November 2005. As of 31 December 2007 the remaining balance receivable from the insurance claims by Vestel CIS amounted TL 2.912 which was duly collected during January-April 2008.

10. FINANCIAL ASSETS

2008

2007

Financial assets available-for-sale

Unconsolidated investments

35

35

Other investments

759

1.678

794

1.713

Share %

Amount

Entity

Country

2008

2007

2008

2007

Unconsolidated investments

Vestpro Electronics SA

Romania

52%

52%

301

301

Vestel USA Inc.

USA

100%

100%

233

233

Vestel Elektronika S.R.L

Romania

100%

100%

19

19

Vestel India

India

100%

100%

10

10

Uts-United Technical Services, S.R.O

Romania

60%

60%

6

6

569

569

Allowance for diminution in value (-)

Vestpro Electronics SA

(301)

(301)

Vestel USA Inc.

(233)

(233)

35

35

Other investments

Zorlu Enerji Elektrik Üretim A.Ş.

Turkey

Less than 1%

Less than 1%

684

1.603

Tursoft A.Ş.

Turkey

7%

7%

13

13

Zorlu Endüstriyel Enerji A.Ş.

Turkey

1%

1%

50

50

İzmir Teknoloji Geliştirme A.Ş.

Turkey

5%

5%

12

12

759

1.678

The above companies in which the Company has a controlling interest or significant influence are not consolidated because:

- Vestpro Electronics SA and Vestel USA Inc. have been inactive since 2002.

- Vestel Electronica SRL, Vestel India and Uts-United Technical Services, S.R.O are newly established companies. As of balance sheet dates, the above noted companies in which the Company has a controlling interest or significant influence are not consolidated as they are immaterial individually and in aggregate to the results and financial position of the Group.

The Company’s policy is to trace all material and significant fixed asset additions under construction in progress and transfer to the related fixed asset accounts when the construction process is completed. Significant portion of the construction-in-progress balance represented investment made in Vestel White to increase its refrigerator and washing machine production capacity and new investment made in cooker and dishwasher segment.

12. INTANGIBLE ASSETS

Goodwill

Development cost

Other intangible assets

Total

Cost

Balance at 01.01.2007

202.896

32.001

174.538

409.435

Additions

816

44.075

6.384

51.275

Disposals

--

(1.175)

(13)

(1.188)

Translation differences

(846)

--

(659)

(1.505)

Transfers

--

645

61

706

Balance at 31.12.2007

202.866

75.546

180.311

458.723

Additions

--

58.566

22.337

80.903

Disposals

(3.470)

--

(1.670)

(5.140)

Translation difference

292

365

839

1.496

Transfers

--

--

604

604

Balance at 31.12.2008

199.688

134.477

202.421

536.586

Accumulated amortisation

Balance at 01.01.2007

14.095

13.355

114.472

141.922

Additions

--

2.033

13.075

15.108

Disposals

--

--

(2)

(2)

Translation differences

(103)

--

(46)

(149)

Balance at 31.12.2007

13.992

15.388

127.499

156.879

Additions

--

16.900

13.144

30.044

Disposals

--

--

(519)

(519)

Translation difference

--

--

310

310

Balance at 31.12.2008

13.992

32.288

140.434

186.714

Net book value as of

31.12.2007

188.874

60.158

52.812

301.844

31.12.2008

185.696

102.189

61.987

349.872

In mid 2001, the Group established the Digital Research and Development Department withinAegean Free Zone – İzmir to contribute to the expansion of the product range in line with technological developments. The Department continues development of digital satellite receivers with common Interface and Personal Video Recording (PVR) capabilities,digital terrestrial receivers, DVD A/V receivers and recordable DVD players. Research and Development Department in Manisa continues development of Integrated Digital TV (DTV), Hybrid TV, Digital TV, TV-DVD, Large Digital TV and Large Flat Screen TV. Development costs principally comprise internally generated expenditure on development costs on the above projects where it is reasonably anticipated that costs will be recovered through future commercial activity.

Other intangible assets include mainly expenditure on computer software, rights and trade marks.

13. BORROWINGS

Current

Non-current

Foreign Currency

TL

equivalent

Foreign Currency

TL

equivalent

2008

New Turkish Lira bank loans

1.967

--

Foreign currency bank loans

-USD ('000)

106.834

161.565

220.467

333.413

-EUR ('000)

66.535

142.439

33.608

71.949

Finance lease liabilities, net

-USD ('000)

396

599

777

1.175

-EUR ('000)

43

93

--

--

-TL ('000)

231

--

363

306.894

406.900

2007

New Turkish Lira bank loans

--

3.439

--

--

Foreign currency bank loans

-USD ('000)

112.889

131.482

287.707

335.093

-EUR ('000)

59.078

101.035

52.755

90.223

Finance lease liabilities, net

-USD ('000)

610

710

--

--

-EUR ('000)

165

282

59

101

236.948

425.417

Summary maturity schedule of total borrowings is given below:

2008

2007

Due in one year

306.894

236.948

One to two years

62.657

80.148

Two to three years

322.123

16.135

Three to four years

8.422

37.333

Four to five years

5.111

282.113

Over five years

8.587

9.688

713.794

662.365

Letters of guarantee and notes amounting to TL 32.893 (EUR 15.365 thousand) have been given as collateral for Turkish Eximbank and other credits (31.12.2007: TL 27.569 (EUR 16.120 thousand)).

Payment schedule of finance lease liabilities is given below:

2008

2007

Finance lease liabilities - minimum lease payments:

Payable with in one year

937

1.021

Payable later then one year and not later than four years

1.969

110

2.906

1.131

Future finance charges on finance leases

(445)

(38)

Present value of finance lease liabilities

2.461

1.093

The present value of finance lease liabilities is as follows:

Payable with in one year

923

992

Payable later then one year and not later than four years

1.538

101

2.461

1.093

14. TRADE PAYABLES

Current

Current accounts

- Third parties

1.391.508

1.473.400

- Related parties, note 26

5.120

3.671

- Letters of credit

284.924

266.498

- Letters of credit discounted

311.651

248.374

Notes payable

- Third parties

5.639

73.627

Other

116

1.024

1.998.958

2.066.594

Unearned interest on payables (-)

(3.771)

(3.759)

1.995.187

2.062.835

15. PROVISION FOR EXPENSES

2008

2007

Current

Warranty provision

56.018

38.397

Expense accruals

43.735

20.077

99.753

58.474

Non-current

Warranty provision

12.617

11.700

Movement of provisions is as follows:

Warranty expense

Expense accruals

Balance at, 01 January

50.097

20.077

Additions

67.178

43.735

Disposals

(48.640)

(20.077)

Balance at, 31 December

68.635

43.735

16. OTHER LIABILITIES

Income tax and social security payables

23.867

23.468

Advances received

21.065

27.724

Deferred project income

47.400

45.654

Due to personnel

7.835

8.576

Other

8.459

4.011

108.626

109.433

17. TAXATION ON INCOME

2008

2007

Current

(10.082)

(39.008)

Deferred

14.581

8.079

Taxation on income

4.499

(30.929)

In Turkey, the corporation tax rate on the profits for the calendar year 2008 is 20% (2007: 20%). Taxable profits are calculated by modifying accounting income for certain exclusions and allowances for tax purposes from the profit disclosed in the statutory income. No other taxes are paid unless profits are distributed.

In Turkey no taxes are withheld from undistributed profits, profits added to share capital (bonus shares) and dividends paid to other resident companies. Other than those, profits distributed in dividend to individuals and non-resident companies are subject to withholding at the rate of 15%.

In Turkey, the tax legislation does not permit a parent company and its affiliates to file a consolidated tax return. Therefore, provision for taxation charge, as reflected in the accompanying consolidated financial information, has been calculated on a separate-entity basis.

In Turkey the exemption period granted on profits from the sale of investment shares and immovable property by Corporation Tax Law transitory articles No. 28 and 29 expired on 31 December 2004. However this exemption was re-enacted by Law No. 5281 on permanent basis in effect from 1 January 2005. Accordingly, 75% of profits from the sale of investments and immovable held for a minimum of two years will be tax exempt provided the sale proceeds are collected within two years and 75% of the profit is added to share capital or is kept in a special reserve account for a minimum of five years.

In Turkey companies were allowed to deduct 40% of the value of fixed assets (exceeding TL 6.000) purchased after 24 April 2003 (investment allowances) from their taxable profits as investment incentive. Such investment deduction is also not subject to income tax withholding. The investment deductions not used in any year because of insufficient profits may be carried to future periods. Investment allowances related to fixed assets purchased or to be purchased under Investment Incentive Certificates granted or applied for before 24 April 2003, may be based on up to 100% of the investment value in fixed assets, but these are subject to tax at 19.8%. Investment allowances have been cancelled as from 1 January 2006 but investment allowances earned prior to this date may be used up to 31 December 2008; any balance unused after this date may not be carried forward; if this option is exercised the balance of taxable profit after deduction of investment allowances is to be taxed at 30%.

In Turkey tax losses that are reported in the Corporation Tax in Turkey return may be carried forward and deducted from the corporation tax base for a maximum of five consecutive years.

The Turkish Tax Procedural Law does not include a procedure for formally agreeing tax assessments. Tax returns must be filed within three and half months of the year-end and may be subject to investigation, together with their underlying accounting records, by the tax authorities at any stage during the following five years.

The taxation liabilities of foreign subsidiaries are calculated in accordance with the regulations of the respective country where the subsidiary is situated, as follows:

Country

% of taxable profit

Germany

31,5

France

33,3

The Netherlands

25,5

UK

28,0

Spain

30,0

Italy

37,3

Russia

20,0

As the balance sheet date, taxation on income for the year is reconciled to the profit per income statements as follows:

2008

2007

Profit (loss) before tax

(407.211)

61.795

Corporation tax using applicable tax rates

10.082

39.008

Disallowable expenses

15.547

37.963

Income not subject to tax

(29.276)

(45.303)

Research and development allowances

(852)

(739)

Taxation on income

(4.499)

30.929

The Group’s prepaid income and Corporation taxes are netted off against the current income tax provision on the balance sheet as stated below:

Corporation and income taxes

10.082

39.008

Prepaid taxes (-)

(9.495)

(27.366)

587

11.642

Deferred tax asset

(65.818)

(42.304)

Deferred tax liability

62.409

56.841

(2.822)

26.179

Deferred taxation

The Group recognizes deferred tax assets and liabilities based upon temporary differences between its financial statements as reported for IAS purposes and its statutory tax financial statements. These differences usually result in the recognition of revenue and expenses in different reporting periods for IAS and tax purposes.

The composition of cumulative temporary differences and the related deferred tax assets/liabilities in respect of items for which deferred tax has been provided at the balance sheet dates using the expected future tax rates were as follows: